In the News—Week of September 12, 2023
Deal of the Week
Amerco, the real estate entity for Uhaul, recently closed on 2 self-storage properties in Yukon, OK and Edmond, OK for $22,500,000. The properties include a combined total of 1362 rentable units on approximately 22 acres of land. The transaction was closed by Assistant Vice President & Senior Escrow Officer, Joel Montemayor, in our Scottsdale office.
Developer believes San Francisco’s downtown will bounce back soon
Cyrus Sanandaji says he believes downtown San Francisco has hit bottom, so it’s time to invest. Sanandaji’s firm, Presidio Bay Ventures, recently paid $40.9 million to buy 60 Spear, a mostly empty building in downtown San Francisco, NBC Bay Area reports. The property had been assessed at $121 million. He thinks the remote work model will die out soon. “They made decisions across the board to try this remote work,” Sanandaji tells the TV station, “and now three years into this experiment, I think we’re hearing from all the major employers, all the major trendsetters in that space — both from the operator’s side but also on the investment side — that it’s not working.”
FDIC seeks buyers for lender’s $33 billion CRE loan portfolio
The U.S. Federal Deposit Insurance Corporation says it is seeking buyers for the $33 billion commercial real estate loan portfolio of New York-based Signature Bank, Reuters reports. Signature’s portfolio is mostly multifamily properties in New York City. The regulator says it will market the portfolio for three months. About half of the value of the properties are rent-controlled apartments.
Converting office buildings into apartments is not as simple as it seems
New York City has followed Boston with an initiative to give landlords who convert office buildings to residential a big tax break. It is hoped that if voters approve, the change will eliminate empty office spaces and add more affordable housing. But American City and County reports that some commercial real estate experts are skeptical. “Building residential housing is incredibly (complicated),” says Gary Kerr, who is with Greystar Real Estate Partners, an international real estate developer and management company. Converting offices into residential units “Is possibly one of the most complicated conversions you can do. It is, in most cases, infeasible.” The challenges include rerouting plumbing and often moving elevators. “I think there is some disconnect between how feasible this is — and a lot of times we get stuck on ‘if it’s physically feasible,’ compared to ‘financially feasible,’” Kerr adds. “There are places where it’s both, and that’s when it happens.”
Cities fear commercial real estatewoes may create problems for budgets
The shift to remote work due to the COVID-19 pandemic has led to a decline in commercial real estate values, potentially impacting the budget of many municipalities, The Tax Policy Center reports. Major cities with large commercial districts are likely to be hardest hit. Projections show the District of Columbia could lose $464 million in tax revenue over the next three years. San Francisco could lose $150 million to $200 million annually by 2028.
Grocery chain sells off 24 Arizona supermarkets as part of merger
About one-fifth of the Albertsons stores in Arizona will be sold as part of a divestiture agreement so the merger with Kroger can go through, The Arizona Republic reports via Newsbreak. C&S Wholesale Grocers will acquire 24 stores. C&S operates the Grand Union and Piggly Wiggly chains in the Midwest and Carolinas. Kroger, the parent of Fry’s Food Stores, and Albertsons say this marks an important step toward the completion of the merger.
Judge OKs timeline for Mesa sports park to be auctioned off
Judge Daniel Collins, who oversees the bankruptcy case of Legacy Park in Mesa, approved the bid procedures to sell the facility, The Arizona Republic reports. Prospective buyers for the sports facility must submit a bid by Sept. 28. A legal team will determine if bidders are qualified. If there is more than one, an auction for the 320-acre sports facility will take place at 10 a.m. Oct. 5 in a courtroom in Phoenix. UMB Bank had agreed to provide $9 million to keep the park operating and those funds will run out by the end of October. Although the 320-acre facility, which opened in January 2022, is popular, it has never made a profit.